Flush with potential? Activist investor insists Japanese toilet giant is an AI sleeper
(2026/02/17)
- Reference: 1771347412
- News link: https://www.theregister.co.uk/2026/02/17/palliser_capital_toto/
- Source link:
The AI hype cycle has officially reached the toilet, with a Japanese bathroom giant suddenly being pitched as a serious tech play.
Activist investor Palliser Capital has taken aim at Japanese loo legend Toto, urging the firm to make more noise about its little-known chip components business and arguing the maker of the "Washlet" – described by the company as "the original shower toilet" – is quietly sitting on a flush of value tied to the AI boom.
In a statement to The Register , Palliser confirmed it had taken a stake in Toto but didn't comment on specifics, beyond saying it's a "top 20 shareholder."
[1]
In a [2]newly published presentation , the investment firm called Toto "the most undervalued and overlooked AI memory beneficiary," saying the company has evolved into a "strategically critical semiconductor materials innovator and supplier."
[3]
[4]
The UK-based fund says the company's advanced ceramics arm produces electrostatic chucks used in cryogenic etching tools for 3D NAND manufacturing – niche but essential kit that helps hold silicon wafers steady. The ceramics are designed to remain stable at extremely low temperatures, helping to clamp wafers in place as memory chips become increasingly layered and finicky.
[5]Gentoo moves to Codeberg from GitHub after airing Copilot concerns
[6]CIOs told: Prove your AI pays off – or pay the price
[7]Ireland joins regulator smackdown after X's Grok AI accused of undressing people
[8]Capita taps Microsoft Copilot to dig it out from UK pensions backlog
Palliser argues the business is central to next-generation chip production and says the segment now contributes more than half of operating profit, underscoring how much of Toto's real value sits far from the bathroom showroom.
With AI infrastructure spending still in full froth, it seems anything with even a whiff of exposure to memory chips is being hauled into the spotlight. Palliser reckons Toto's valuation gap is largely down to investors not fully appreciating what's going on behind the bathroom door, putting the disconnect at about ¥554 billion ($3.6 billion).
The fund says fixing disclosure, tightening capital allocation, and improving capital efficiency could unlock "well over 55 percent upside" for shareholders – a pitch that essentially boils down to telling the market there's more to this outfit than heated toilet seats. Palliser says the factors behind the valuation gap are "readily solvable" if the company leans harder into the story and backs the business appropriately.
[9]
When the market starts pitching a toilet maker as an AI infrastructure bet, you can't help but wonder whether the hype has finally gone fully down the drain – or whether investors are just determined to squeeze every last drop out of the boom before someone eventually pulls the chain. ®
Get our [10]Tech Resources
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[2] https://www.businesswire.com/news/home/20260217852087/en/Palliser-Capital-Publishes-Value-Enhancement-Plan-for-TOTO
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[5] https://www.theregister.com/2026/02/17/gentoo_moves_to_codeberg_amid/
[6] https://www.theregister.com/2026/02/17/no_roi_no_ai/
[7] https://www.theregister.com/2026/02/17/ireland_dpc_x_grok_probe/
[8] https://www.theregister.com/2026/02/17/capita_microsoft_copilot_pensions/
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[10] https://whitepapers.theregister.com/
Activist investor Palliser Capital has taken aim at Japanese loo legend Toto, urging the firm to make more noise about its little-known chip components business and arguing the maker of the "Washlet" – described by the company as "the original shower toilet" – is quietly sitting on a flush of value tied to the AI boom.
In a statement to The Register , Palliser confirmed it had taken a stake in Toto but didn't comment on specifics, beyond saying it's a "top 20 shareholder."
[1]
In a [2]newly published presentation , the investment firm called Toto "the most undervalued and overlooked AI memory beneficiary," saying the company has evolved into a "strategically critical semiconductor materials innovator and supplier."
[3]
[4]
The UK-based fund says the company's advanced ceramics arm produces electrostatic chucks used in cryogenic etching tools for 3D NAND manufacturing – niche but essential kit that helps hold silicon wafers steady. The ceramics are designed to remain stable at extremely low temperatures, helping to clamp wafers in place as memory chips become increasingly layered and finicky.
[5]Gentoo moves to Codeberg from GitHub after airing Copilot concerns
[6]CIOs told: Prove your AI pays off – or pay the price
[7]Ireland joins regulator smackdown after X's Grok AI accused of undressing people
[8]Capita taps Microsoft Copilot to dig it out from UK pensions backlog
Palliser argues the business is central to next-generation chip production and says the segment now contributes more than half of operating profit, underscoring how much of Toto's real value sits far from the bathroom showroom.
With AI infrastructure spending still in full froth, it seems anything with even a whiff of exposure to memory chips is being hauled into the spotlight. Palliser reckons Toto's valuation gap is largely down to investors not fully appreciating what's going on behind the bathroom door, putting the disconnect at about ¥554 billion ($3.6 billion).
The fund says fixing disclosure, tightening capital allocation, and improving capital efficiency could unlock "well over 55 percent upside" for shareholders – a pitch that essentially boils down to telling the market there's more to this outfit than heated toilet seats. Palliser says the factors behind the valuation gap are "readily solvable" if the company leans harder into the story and backs the business appropriately.
[9]
When the market starts pitching a toilet maker as an AI infrastructure bet, you can't help but wonder whether the hype has finally gone fully down the drain – or whether investors are just determined to squeeze every last drop out of the boom before someone eventually pulls the chain. ®
Get our [10]Tech Resources
[1] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aZSesRDWmm5mFOdf0fzvlwAAA48&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[2] https://www.businesswire.com/news/home/20260217852087/en/Palliser-Capital-Publishes-Value-Enhancement-Plan-for-TOTO
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aZSesRDWmm5mFOdf0fzvlwAAA48&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
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[5] https://www.theregister.com/2026/02/17/gentoo_moves_to_codeberg_amid/
[6] https://www.theregister.com/2026/02/17/no_roi_no_ai/
[7] https://www.theregister.com/2026/02/17/ireland_dpc_x_grok_probe/
[8] https://www.theregister.com/2026/02/17/capita_microsoft_copilot_pensions/
[9] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aZSesRDWmm5mFOdf0fzvlwAAA48&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[10] https://whitepapers.theregister.com/